How Hitting Rock Bottom Helped 11 People Turn Their Finances Around
Financial success doesn’t come easily. Sometimes, in fact, it comes after the lowest point in one’s life — a declined credit card, defaulting on student loans, a lengthy legal battle with your ex-spouse over the rug that you specifically paid for with your own money and all your friends agree really should be yours.
To explore this rainbow-after-the-rain phenomenon, GOBankingRates spoke with 11 real people about the rock-bottom moments that turned their finances around. Using financial pain as a motivator, these folks went from rags to riches.
I Tanked My Credit to Move During the Housing Crisis
Annick Lenoir-Peek, creator of blog The Common Traveler, hit rock bottom when the housing market tanked. Her then-husband had gotten a job offer out of state and they needed to unload their home.
“We tried to refinance, rent it out, sell at a loss — nothing was working,” she said.
Unfortunately, their only option was a deed in lieu of foreclosure, but the mortgage company required them to miss two payments first — a move that would ruin their credit.
“I was at work on the phone with the man from the bank,” Lenoir-Peek said. “I cried, since making the decision to stop paying was so hard.”
Sabotaging her own finances wasn’t easy, but Lenoir-Peek was able to move forward and focus on the financial journey ahead.
More Success: From Rock Bottom to NY Times Best-Selling Author
I Couldn't Pay Rent Without Racking Up Debt
Lou Haverty, creator of Financial Analyst Insider, experienced a dark period when he graduated college during the dot-com bubble burst and it was hard to find a job.
“I ended up in a low-paying phone job at a large mutual fund company, couldn’t pay my rent and racked up credit card debt in the process,” he said.
Feeling stuck pushed Haverty to become a chartered financial analyst, to which he credits attaining “a better job and a more stable financial position” today.
My Husband Was Laid Off and We Owed Over $10,000 in Taxes
Financial coach Ashley Patrick and her husband took out a 401k loan to remodel their home.
“It ended up costing me $1 million dollars at retirement age,” she said.
To make matters worse, Patrick’s husband was laid off from his job just 60 days before the loan was due. Without the funds to pay it back, “it then counted as a withdrawal on our taxes the following year,” she said. “It cost us over $10,000 just in taxes.”
Fortunately, Patrick put the amount owed to the IRS on a credit card with 0 percent interest, and began researching debt payoff strategies. The couple was then able to pay off $45,000 in just 17 months. The turnaround inspired her to start her blog Budgets Made Easy, where she shares her journey and financial planning tips.
I Was Tens of Thousands in Debt and Had to Go on Welfare
Michael Chadwick, top-producing real estate agent with Citi Habitats, wasn’t always so successful.
“Nine years ago, I was tens of thousands of dollars in debt,” he said.
He came to New York to be an actor, but things didn’t go as planned.
“The talent agents told me my theater degree was worthless and I should pick another career,” he added. Things eventually got so bad for the acting hopeful that in 2010, he had to go on welfare.
Fortunately, Chadwick met Lesley, a successful real estate agent, who decided to take him under her wing. Eight years later, he has paid off all of his credit card debt and is close to erasing his student loans. He hasn’t given up on his acting dream either, having recently joined the Screen Actors Guild.
I Found Out My Dad Left $15,000 in Student Loan Debt When He Died
Dylan Wittman’s bad money moment came after a personal tragedy.
“My father passed away right after Christmas,” said the TravelerInfoHub creator. “I flew across the world to sort out his finances. It shocked me to learn how bad his financial situation actually was. What I also learned was the $15,000 of [my] student debt he said he would pay off wasn’t really being paid.”
His dad’s sad financial situation sparked change in Wittman. He started making better choices with his own money. He eventually started his own business and became debt free.
I Had to Move Into My Dad’s Basement
Phil Risher, blogger at Young Adult Survival Guide, was at rock bottom when he graduated college with $30,000 in student loans.
“At that point in my life it felt like a million dollars,” he said.
The graduate got a job making $48,000 a year — nothing to sneeze at — but soon realized that he needed to find ways to get out from under debt even faster.
“I set up a budget to pay off my debt in 12 months by living off $500 a month,” he said. “I called my dad and asked if I could live in his basement for a year without paying rent. I would be an on-call baby sitter, cut the grass, [do] dishes, etc.” Luckily, his dad agreed.
By making those changes, Risher was able to crush his debt by age 23. By 27, he had done so well for himself that he quit his job to travel around the country with his dog.
Our Debt Hit Six Figures
In 2008, Cherie W. Lowe, author and blogger behind Queen of Free, and her husband stopped turning a blind eye and totaled up their debt. Turns out, they had six figures to tackle.
“In many ways, the timing was horrible,” she said. “Remember … the housing market crisis?” Plus, the couple had just had their second child.
The Lowes thought it would take 15 years to pay down their debts, perhaps half that if they really gave it their all. “And yet, by grace, on March 28, 2012, we made our final student loan payment, bringing the grand total paid off amount to $127,482.30,” she said.
I Lost Everything in a Ponzi Scheme
In the early years of Jonathan Faccone’s business, he was struggling to get by. Hoping for a few pointers, he found a mentor who appeared successful in the industry. After a few years of being under the man’s wing, however, Faccone realized his mentor wasn’t what he seemed.
“He was running a Ponzi scheme, raising money from individuals, then not using it for its intended purpose,” said the Halo Homebuyers, LLC founder, who had also fallen into the trap. “I had not only lost everything that I had saved, I was in debt thousands of dollars with little hope of seeing [that money] back.”
The experience pushed him to make changes with his business. Fortunately, after two years, he recovered everything he had lost.
I Was Already Broke — and Then I Got Laid Off
From 2010 to 2014, blogger Todd Kunsman was making major money mistakes. He had no savings, had just bought a brand new car despite having student loans to repay and was living paycheck to paycheck. To make things worse, he was laid off two weeks before Christmas.
“I was shocked, confused and stressed. I had some severance pay, but after that, I needed a job and had no real savings to fall back on,” he said. “But, this was the kick in the butt I needed.”
Kunsman remade his finances and learned about investing in the process. He now runs the site Invested Wallet, in which he shares tips on side hustles, entrepreneurship and more.
AmEx Canceled My Card
Financial coach Alaya Linton of the blog Hope+Cents got a nasty surprise when American Express sent her a letter stating her credit card would be canceled.
“I had been engaging in spending habits that made it clear I could not handle the responsibility of that card, and on top of that, had just paid my most recent bill a day late,” she said. “After reading that letter, I sat down at my dining table and cried.”
This was the rock-bottom moment that turned Linton’s finances around. She created a budget and embarked on a journey to debt freedom.
Don’t Make the Same Mistakes: 40 Money Habits That Can Leave You Broke
I Pawned My Grandmother’s Wedding Ring
Christine Luken, creator of site The Financial Lifeguard, has shared her rocky financial journey in detail, but one moment sticks out. Back in the 1990s, her then-fiancé, Jeff, came to her, pleading for help. His friend, Brad, was in jail and needed someone to bail him out, and Jeff didn’t have the money. He persuaded Luken to take out a pawn loan on her grandmother’s wedding ring.
“I ended up paying interest on the pawn loan for 24 months — $720 in total,” she said. “That’s 480 percent of what I originally borrowed.” Luckily, she eventually got the ring back when the shop owner took pity on her.
Luken later broke up with her fiancé and has since married a new man. She has a new book out as well, “Manage Money Like a Boss,” and she’s happy to be doing just that — far from the pawnshop.
Click through to read about how 11 successful companies survived their own rock bottoms.
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This article originally appeared on GOBankingRates.com: How Hitting Rock Bottom Helped 11 People Turn Their Finances Around
